Subsequent to the Close of Spacely Sprockets Fiscal Year Ending

question 88

Multiple Choice

Subsequent to the close of Spacely Sprockets fiscal year ending October 31,2016,a major debtor has declared bankruptcy due to a series of events.The receivable is significantly material in relation to the financial statements,and recovery is doubtful.The debtor had confirmed the full amount due to Spacely Sprocket at the balance sheet date.Because the account was confirmed at the balance sheet date,Spacely refuses to disclose any information in relation to this subsequent event.The CPA believes that all other accounts were stated fairly at the balance sheet date.In addition,Spacely changed their method of inventory valuation from FIFO to LIFO.This change was disclosed in Note X to the financial statements.Accordingly,what type of opinion should be expressed?

• A)unqualified with an explanatory paragraph
• B)qualified due to a GAAP departure
• C)qualified due to a scope limitation
• D)a combination of B and C

---

Definitions:

Actual Behaviour

The observed actions or reactions of an individual in a given situation, as opposed to intended or theoretical behavior.

Theory of Reasoned Action

A psychological theory that explains an individual's behavior based on their intention to perform the behavior, which is influenced by their attitudes and subjective norms.

Predicting Behaviour

The process of forecasting individuals' future actions based on past and current behavior patterns, often used in psychology and marketing.

Original Fishbein Model

A psychological model developed by Martin Fishbein in the 1960s, used to predict behaviors based on an individual's attitudes towards the behavior and subjective norms.